Philipp Heimberger and Nikolaus Kowall at Social Europe:
1. Italy is living below its means
‘Italy is living beyond its means!’ This omnipresent claim is readily supported by pointing to Italy’s public debt, which amounts to 135 per cent of its economic output. Yet this means only that the public sector is highly indebted—it says nothing about the Italian economy as a whole.
A country lives beyond its means if it imports significantly more goods and services than it exports over the long term. A country that exports as much as it imports is not however living beyond its means, as production and consumption are in line. Indeed, Italy has been recording export surpluses since 2012. Italy’s export surpluses are by no means only due to tourism, as the country exports more industrial goods than it imports. The Italian economy therefore consumes less than it produces—it lives below its means.